West Texas Intermediate (WTI) crude oil prices edged higher to around $80.10 per barrel during Asian trading hours on Tuesday, following a sharp 3.7% decline the previous day. The market is currently in a holding pattern as traders await further developments regarding a potential interim peace agreement between the United States and Iran, which could lead to the reopening of the blockaded Strait of Hormuz—a critical passageway for global oil and liquefied natural gas shipments responsible for about one-fifth of world supply [1].
US President Donald Trump announced that a memorandum of understanding (MoU) has been signed to end the conflict and reopen the Strait of Hormuz. However, neither the US nor Iran has released the official text of the agreement, leading to continued caution among market participants. Major shipping companies are reportedly delaying the rerouting of vessels through the strait until more details are made public. According to Iran's Mehrnewsagency, the draft agreement proposes reopening the strait within 30 days under Iranian arrangements [1].
In anticipation of re-entering the global market, the National Iranian Oil Company has sharply reduced its official selling price for July light crude to Asian buyers, cutting the premium to $7.15 per barrel above the Oman/Dubai average from $13 the previous month. This aggressive pricing move comes as the energy sector deals with the aftermath of a three-month blockade, which has resulted in the loss of millions of barrels of supply. Analysts remain uncertain about how quickly production and shipping volumes can recover once the strait is reopened [1].
Meanwhile, the US Department of Energy reported a significant drawdown in the Strategic Petroleum Reserve (SPR), which fell by 8.9 million barrels last week—the third-largest weekly decline on record—bringing the reserve down to 340.3 million barrels, its lowest level since 1983. These drawdowns are part of a US agreement to loan 172 million barrels from the SPR to help alleviate high domestic fuel prices amid ongoing geopolitical uncertainty [1].
CONCLUSION
The WTI oil market remains cautious as traders await confirmation and details of a US-Iran peace accord that could reopen the Strait of Hormuz and restore lost supply. Aggressive pricing by Iran and record-low US oil reserves underscore the current tightness in global oil markets. The situation holds significant implications for oil prices and supply dynamics in the near term.